The Exchanges

Q Not at all. I've been looking forward to this one, but let's start with a little bit on you. And I always believe that journalists make the best investors for obvious bias reasons, but I do want to start on a little bit of that. And how did you make your way into the world of venture and come to be a partner today at GC?

A Well, I've definitely had a circuitous path to venture. I began my career as a general assignment reporter in the feature section of the Washington Post. And really the only requirement for that job is just that you have to be extremely curious about everything and be able to write on deadline. So I'd begin my week by doing an investigative deep dive into the finances of the Smithsonian Institution, and I'd end it by hopping on a plane and going to California to write a 5000 word piece on Carol Burnett, who's the godmother of sketch comedy. So it required sort of this rabid curiosity about everything in the world and really a love of the adrenaline rush of having a new assignment every few days. So I probably would have been a journalist the rest of my life Had it not been for just a terrible business model when I was at the post. So I was there from 20 10 to 20 14, and it was really dire straits. It was before Jeff Bezos bought the paper, and I actually had an editor pull me aside and say, Catherine, you're young enough. You can do something else with your life. You should probably leave, and I was really somewhat despondent about that, but I had a good friend who was at the post, and her husband had just gotten out of the Navy, and she said, my husband just left the Navy, and he's going to Stanford Business School. You don't have to know anything about business. You should ap…

AI assessment note: “I've definitely had a circuitous path to venture. I began my career as a general assignment reporter”

Q I'm totally aligned there. I do want to ask a couple of things, unpack in the background there, and it's, you mentioned the journalism. It's a rare background going into venture. So why is it, do you think, that you believe venture is like journalism? I've heard you say that before. Why is venture like journalism?

A Yeah, well, I always joke that they're the exact same job, except in journalism, you write a story, and in venture, you write a check. But you really are hunting for the same things. So the three components of a great story are strong protagonists, A contrarian hook or thesis that really makes people's eyes light up, and sort of this why now question, or the macro change that's happening that's leading for the story to be relevant. And that's exactly what we look for as early stage venture capitalists. Beyond that, the day-to-day is actually pretty similar too. You have sources that are on rotation that you're constantly texting, trying to get the scoop from, you're competing against hundreds of other people who are trying to usually get into the same story, you're doing diligence, and you're making snap judgments based on very limited data. I'd say the biggest thing I took away from journalism That has helped me in my investing career is this understanding of what conviction looks like. I very much believe that investing is this unique combination of reason and revelation, and that understanding that mix is sort of the key to being a great investor, and I think it's also the key to being a great journalist. So I definitely feel like that was something that I got from my journalism training. But there's also a lot of differences, and I'd say the biggest difference is the probab…

AI assessment note: “in journalism, you write a story, and in venture, you write a check.”

Q I mean, we could just do vote Catherine for president. I mean, then final one. Tell me, what's the most recent publicly announced investment, Catherine, and why did you get so excited and say yes?

A So publicly announced is a company called Ophelia Health, and they are building a telehealth platform for medication-assisted treatment for patients who are suffering with opioid addiction. And this is a space, I read a book that I recommend to everyone called Dreamland about the opioid epidemic in this country and sort of the origins of it. And I looked for two years for a company that That was solving this problem in a way that I thought could actually help people get access to Suboxone treatment, which is the only treatment that we know works most effectively for people who have long-term opioid abuse disorder. And there's a number of companies working on it, but the difference between Zach Gray's thesis at Ophelia was so many people focused on the assisted of MAT, which is medication assisted treatment. He was focusing on the medication. How do we get Suboxone in the hands of the most people? Because we know it's effective. And so I am so excited. They're doing incredibly well and performing a very important service during COVID, and I'm really excited to be part of their story.

AI assessment note: “So publicly announced is a company called Ophelia Health”

Q off the government elements. When you think about like the verticalization of traditionally kind of horizontal players like government say, and you say, take this specific task and there's a company innovating in that realm. How do you think about like how big the market has to be for you to get excited? Do you know what I mean? How do you approach market sizing when you're unbundling bundled propositions?

A In the case of government, I mean, I think the markets are huge. I mean, you could talk about education, healthcare, defense and security. These are massive markets, and it's actually pretty easy to size these markets because the federal government is, or the budget is public. So you can see how much the government is spending, and you can see, okay, if we add technology to this, how large will the market actually be, and will people actually pay? The big question for me is not necessarily market size, because I think these are civic services that people will pay for. The big question is, Can you deliver a product that makes the experience much more delightful and that people will pay for it? And what is that entry point? So in the education, I mean, you look at something like Guild Education and Rachel's company. I mean, we've been talking about upskilling the American workforce for decades, since offshoring has become the way that we've built. And it took a company in Denver that's five years old to actually figure out how you align the incentives so that we can upskill the next generation of the American workforce, of the adult workforce. And so, to me, these markets are so large. It's just figuring out how to align the incentives and how to make sure that you're delivering a good service. Same thing with creating new defense companies like Andrel. For 30 years, the governme…

AI assessment note: “it's actually pretty easy to size these markets because the federal government is, or the budget is public”

Q Not at all. I've been looking forward to this one, but let's start with a little bit on you. And I always believe that journalists make the best investors for obvious bias reasons, but I do want to start on a little bit of that. And how did you make your way into the world of venture and come to be a partner today at GC?

A Well, I've definitely had a circuitous path to venture. I began my career as a general assignment reporter in the feature section of the Washington Post. And really the only requirement for that job is just that you have to be extremely curious about everything and be able to write on deadline. So I'd begin my week by doing an investigative deep dive into the finances of the Smithsonian Institution, and I'd end it by hopping on a plane and going to California to write a 5000 word piece on Carol Burnett, who's the godmother of sketch comedy. So it required sort of this rabid curiosity about everything in the world and really a love of the adrenaline rush of having a new assignment every few days. So I probably would have been a journalist the rest of my life Had it not been for just a terrible business model when I was at the post. So I was there from 20 10 to 20 14, and it was really dire straits. It was before Jeff Bezos bought the paper, and I actually had an editor pull me aside and say, Catherine, you're young enough. You can do something else with your life. You should probably leave, and I was really somewhat despondent about that, but I had a good friend who was at the post, and her husband had just gotten out of the Navy, and she said, my husband just left the Navy, and he's going to Stanford Business School. You don't have to know anything about business. You should ap…

AI assessment note: “I've definitely had a circuitous path to venture. I began my career as a general assignment reporter”

Q In terms of kind of challenging your thinking, I think, you know, Founders Fund would probably be the firm that stands out for kind of challenging one's thinking. Such a unique firm. I'm intrigued from your time there, what were your biggest takeaways? Because it was such also an impactful time in your kind of venture career being the first exposure. How did it impact your investing mindset?

A It's interesting because I think the biggest takeaway for me from Founders Fund is also something that I really love about GC, and it's that they both believe as firms that there's no One right way to practice venture. Everyone at these firms takes pride in the fact that they allow different strategies and styles of investing to prevail among their investors, and I think that's so important. I'll give you a few examples because I think I've worked with two of some of the best investors that are practicing right now in the Valley, and they practice very different. So I'd say Hey Montanesia is the best proactive investor in the business. He's someone who can see the future 10 years out and build companies from scratch as a co-founder with them and see them come to fruition. I think Livongo is a perfect example of that, that you saw the future 10 years ago, and now you're seeing this incredible telehealth company at a time where no one could have predicted what we're going through. I put Trey Stevens in that bucket as well as the co-founder of Andrel, as someone who really understands how to see the future and build companies. The flip side of that is someone like Brian Singerman, who I think is one of the best reactive investors in the Valley, where he has no theses, doesn't think about the future, and just listens to the founder and the story and uses his own frameworks and is a…

AI assessment note: “biggest takeaway for me from Founders Fund is... there's no One right way”

Q of people can seem obsessed, but actually when you dig, you know, five layers deep, they're not actually as obsessed as you think they are. And also combined with the fact that, bloody, I don't know much about defense, really, deep down, or community colleges, as I'm sure few VCs do, how do you think about what are the signals that to you derive founder narrative fit and true obsession?

A I ask a lot of how questions. I think often the questions that we ask in sort of a 30 minute pitch meeting are, tell me about the problem, tell me about the solution, the what, how are you thinking about metrics? I think there's nothing more valuable than time in this business, and the more time you can spend with founders really digging into how. How are you going to do this? How have you thought about this? Have you thought about the chessboard? What is the strategy? What does six months from now look like? A lot of those how questions are more revelatory on how deep the founder has gotten into their own theses. Usually if a founder has a really compelling thesis, it's something that you haven't heard before. It usually goes against a dominant narrative or kind of a dominant belief, and they usually have so much data or so many examples that back up that sort of contrarian narrative because they've had to defend it so much. So I think those are the things that I really look for in sort of the founder story, and the way it manifests itself in a lot of the companies I work with is often that leads people to build in spaces that other people just aren't building in. Often these are very end-of-one companies. With Novacreda and Misha, there really isn't another Credit reporting agency built for immigrants. No one else is building in that sector. There are very few companies, and …

AI assessment note: “I ask a lot of how questions.”

Q of how much they're willing to teach you. The other element of time that's super important is bloody market timing, and it's something that I've always said I don't like Take market timing risk. I find there's so many different risks in this business. Adding market timing and kind of consumer adoption on top of that fundamentally scares me in many respects. How do you think about market timing risk?

A You know, I think market timing risk is very difficult, but I think it's different than sort of these macro tailwinds or secrets that I look for. With macro tailwinds, there's a real force accelerating a trend that might have been there all along, and I'll give you an example of this. I think we're seeing, and I think every person with children right now is seeing this, that like there is a Huge change happening in K through 12 education because of COVID. And the two things that I think have really changed are parents are now aware of how their kids are learning, but they're also aware of what their kids are learning. I think that's actually the biggest kind of shock that's happened to parents during this five month process. And it's not that devolution of K through 12 education wasn't happening six or 12 months ago. I think if you invested in a company 12 months ago that was building infrastructure for K through 12 education, You could have built a massive business despite what happened with COVID, but the macro tailwind actually just accelerated a trend that was already in existence and sort of illuminated it for us and sort of raised different questions about it. So I think there's a difference between pure market timing risk, which is will we be able to see autonomous vehicles on the street within the next five years, or the trend of we're building infrastructure for a tren…

AI assessment note: “market timing risk is very difficult, but I think it's different than sort of these macro tailwinds”

Q In terms of kind of challenging your thinking, I think, you know, Founders Fund would probably be the firm that stands out for kind of challenging one's thinking. Such a unique firm. I'm intrigued from your time there, what were your biggest takeaways? Because it was such also an impactful time in your kind of venture career being the first exposure. How did it impact your investing mindset?

A It's interesting because I think the biggest takeaway for me from Founders Fund is also something that I really love about GC, and it's that they both believe as firms that there's no One right way to practice venture. Everyone at these firms takes pride in the fact that they allow different strategies and styles of investing to prevail among their investors, and I think that's so important. I'll give you a few examples because I think I've worked with two of some of the best investors that are practicing right now in the Valley, and they practice very different. So I'd say Hey Montanesia is the best proactive investor in the business. He's someone who can see the future 10 years out and build companies from scratch as a co-founder with them and see them come to fruition. I think Livongo is a perfect example of that, that you saw the future 10 years ago, and now you're seeing this incredible telehealth company at a time where no one could have predicted what we're going through. I put Trey Stevens in that bucket as well as the co-founder of Andrel, as someone who really understands how to see the future and build companies. The flip side of that is someone like Brian Singerman, who I think is one of the best reactive investors in the Valley, where he has no theses, doesn't think about the future, and just listens to the founder and the story and uses his own frameworks and is a…

AI assessment note: “the biggest takeaway for me from Founders Fund is also something that I really love”

Q of people can seem obsessed, but actually when you dig, you know, five layers deep, they're not actually as obsessed as you think they are. And also combined with the fact that, bloody, I don't know much about defense, really, deep down, or community colleges, as I'm sure few VCs do, how do you think about what are the signals that to you derive founder narrative fit and true obsession?

A I ask a lot of how questions. I think often the questions that we ask in sort of a 30 minute pitch meeting are, tell me about the problem, tell me about the solution, the what, how are you thinking about metrics? I think there's nothing more valuable than time in this business, and the more time you can spend with founders really digging into how. How are you going to do this? How have you thought about this? Have you thought about the chessboard? What is the strategy? What does six months from now look like? A lot of those how questions are more revelatory on how deep the founder has gotten into their own theses. Usually if a founder has a really compelling thesis, it's something that you haven't heard before. It usually goes against a dominant narrative or kind of a dominant belief, and they usually have so much data or so many examples that back up that sort of contrarian narrative because they've had to defend it so much. So I think those are the things that I really look for in sort of the founder story, and the way it manifests itself in a lot of the companies I work with is often that leads people to build in spaces that other people just aren't building in. Often these are very end-of-one companies. With Novacreda and Misha, there really isn't another Credit reporting agency built for immigrants. No one else is building in that sector. There are very few companies, and …

AI assessment note: “A lot of those how questions are more revelatory on how deep the founder has gotten”

Q Catherine, I have to ask, when you said about reason and revelation there, can you unpack that for me? I haven't heard that before, which is quite rare considering I've done over two and a half thousand episodes. What do you mean by reason and revelation?

A Sure, it's kind of wonky, but I studied political philosophy for a very long time, and that was what I studied in college. There's this one great philosopher named Leo Strauss who talks about sort of human beings being this combination of reason, which is very much defined by Athens, the city, and Jerusalem is where we define ourselves in terms of revelations. So sort of these gifts and secrets That we try to look for in the world that we don't know where they come from, but they're insights that all of humanity feels. And I do think that that is early stage investing to a T. It's this rare human combination of you look for as much data as you can and you try to build these logic trees, but at the end of the day, you're making these instinctual choices based on sort of revelation. And I think, you know, other investors will call it secrets or they'll say they're looking for a hook that other people don't see or sort of contrarian narrative. But I really think it comes down to just this weird balance of what makes us human.

AI assessment note: “making these instinctual choices based on sort of revelation”

Q your New York Times, your Wall Street Journals continue and prevail and be strong, and then you would see this incredible kind of long tail of creators on Substack, Who would kind of persist and write their own incredible content, but to very niche, verticalized audiences. Do you think it is this kind of tiny and then huge, and there's no no man's land? How do you think about that?

A I do think that we'll see the middle fallout first. I mean, we've already seen the middle fallout in terms of sort of small metro papers. And so, 100%, I do think we're going to see that trend. But what has been shocking this summer is to see the number of very famous writers who used to have their brand in their cachet from the New York Times or from the universities that they're working with. And when you look at this population, this population actually makes its money from being the chair of a journalism department and from being an op-ed writer. And those are the two institutions that I think have really fundamentally changed. One, because of COVID with the university education, and then two, the news media, just many readers and many people that used to have great trust in these institutions just no longer trusting them. So I do think you can see a shift even at the top, even at the Washington Post and the New York Times, where people will opt out of those premier institutions because they value the freedom to monetize their following. And they also value the freedom to say what they think.

AI assessment note: “I do think that we'll see the middle fallout first.”

Q What's the hardest element of your role with general catalyst today?

A Oh gosh, I think the hardest moment right now is just that we're quarantined in our houses. We've talked a lot about finding ground truth today, and it is really, really difficult to be a great investor when you're only listening to mononarratives and things happening online. I actually think you have to get out and speak to people and really know what's going on on the ground. I actually flew to my hometown in northern Florida A couple months ago and spent about six weeks there with my family and just really did it because I wanted to find out what's actually going on in the rest of the country. And I think that's so important for investors. So the thing that keeps me up at night is that we're going to be quarantined for a lot longer and not be able to get to this sort of ground truth because we are stuck in our homes.

AI assessment note: “the hardest moment right now is just that we're quarantined in our houses”

Q Can I ask, when you thought about that then, and kind of carving your own path, how did you think about whether you want to be reactive or proactive, and how would you analyze what you are today?

A Yeah, I mean, it's a great question. And I think part of being an investor is that you get to Experiment with all sides of that. I'm probably more on the reactive side, to be honest. I love thinking about feces and love thinking about the future, but at the same time, I've never built a company. I'm not a builder, and I'm not the sort of person who is going to partner with the founder side by side and kind of, I don't have that sort of experience that I think people like Trey and Haymont have, but I'd say in terms of the reactive model, you're really listening, and I'd say that the core superpower of a former journalist or the core superpower of many investors is to just listen to the And actually decide whether you believe the story to be true, and then be kind of a helpful, almost Socratic guide to the founder on their journey to make sure that you're pressure testing their belief in their own conviction throughout the ten-year journey that you're on together. So that's sort of the role that I like to play, and I think it's much more natural for me, given the fact that I've always been the sort of person who's much more of a chronicler in life than the sort of person who's going to go out and be kind of front and center and build the future in the way that we see so many great founders do.

AI assessment note: “I'm probably more on the reactive side, to be honest.”

Q Can I, sorry, I'm using this completely as my own advice platform here, but how do you avoid that? Because it is very tough to not get caught in the cyclone of hype, the cyclone of preemptive rounds, quick up rounds, bluntly, and actually Stick to thesis when so much of the surroundings aren't.

A Yeah. I mean, I think I have a pretty strong framework for what I'm looking for in terms of I invest almost solely in what I call founder narrative fit, where I'm really, really focused on kind of certain traits and a founder. And I spent a lot of time kind of digging into that. And what's interesting is that I've seen a pattern in my own thinking where the founders that I'm really impressed by, whether it's Palmer and Brian at Anderle or Misha at Nova Credit or Rachel at Guild, they're people who are so obsessed with With a sector, that the deeper you dive into it with them, the more questions you ask them, it's like going down a rabbit hole together, and I'd say there's very few founders that have that quality, so I haven't had a hard time kind of straying from my own conviction that that's exactly what I'm looking for in people, but I think it's hard. I think it means that I don't spend that much time with other investors. I have a small group of people that I spend time with, and I really look for founders who have sort of a deep understanding of the problem they're solving. They may not have the solution yet, but they're obsessed with the problem, and I'd say that's sort of what kept me really focused On sort of a framework that I have.

AI assessment note: “I think it means that I don't spend that much time with other investors.”

Q of how much they're willing to teach you. The other element of time that's super important is bloody market timing, and it's something that I've always said I don't like Take market timing risk. I find there's so many different risks in this business. Adding market timing and kind of consumer adoption on top of that fundamentally scares me in many respects. How do you think about market timing risk?

A You know, I think market timing risk is very difficult, but I think it's different than sort of these macro tailwinds or secrets that I look for. With macro tailwinds, there's a real force accelerating a trend that might have been there all along, and I'll give you an example of this. I think we're seeing, and I think every person with children right now is seeing this, that like there is a Huge change happening in K through 12 education because of COVID. And the two things that I think have really changed are parents are now aware of how their kids are learning, but they're also aware of what their kids are learning. I think that's actually the biggest kind of shock that's happened to parents during this five month process. And it's not that devolution of K through 12 education wasn't happening six or 12 months ago. I think if you invested in a company 12 months ago that was building infrastructure for K through 12 education, You could have built a massive business despite what happened with COVID, but the macro tailwind actually just accelerated a trend that was already in existence and sort of illuminated it for us and sort of raised different questions about it. So I think there's a difference between pure market timing risk, which is will we be able to see autonomous vehicles on the street within the next five years, or the trend of we're building infrastructure for a tren…

AI assessment note: “market timing risk is very difficult, but I think it's different than sort of these macro tailwinds”

Q some ways kind of relates to a big question that I have, which is especially kind of when you look at a lot of your companies around regulation and defensibility, mine being like, how do you think about defensibility through regulation? I know Brian at Founders Fund talks about kind of complex coordination, especially around regulation, being the secret to defensibility. How do you think about kind of the relationship

A Yeah, I mean, the reason I love regulation, to be frank, is that I think it's a proxy for market size, but I think you have to look at the right regulated markets. So oftentimes you see Silicon Valley investors putting a lot of money into a company where they're expecting a regulatory change to happen, and that goes to your question about market timing. That can be terrifying. You can totally misread Washington, but I actually like these markets like aerospace and defense where the board is set, the regulation is set, and there is a massive, massive market On the opposite end of that regulation that's been in place for 50 years. And if you can get through the regulatory hurdles or the procurement hurdles and see that market on the other side, you are competing against the slowest moving incumbents because they have had an effective monopoly for decades. That's true of education. That's true of defense. It's true of credit reporting. And so I love companies that are really, really focused on these stodgy industries where, yes, there's a lot of regulation in the front end, but no one has really tried to get through it recently. And if you can get through that front end regulation, There's a massive market waiting for you at the back end of it.

AI assessment note: “if you can get through that front end regulation, There's a massive market”

Q kind of the challenge of inserting yourself at the A. I think a question for you when I think about that is kind of on pricing. How do you think about pricing? I mean, I see some pretty crazy pricing, say more than ever, actually, I think today. How do you think about your own price sensitivity? And how do you determine when to stretch versus when to be disciplined?

A It's a great question. And I think if you look at interest rates and the four trillion dollar cash infusion we just had and where investors are parking their money, it's very clear to me that the private market would Prices are what they are, and we can't sort of long for the good old days anymore. I'm focused on early stage, so in this environment, I think you have to be very confident that you're picking the right companies. It's hard to have a lot of price sensitivity at seed or series A in this environment. That said, I'm always amazed at investors who mock other investors for paying up for companies, and I think there's far more shame in losing on price than winning on price, and no one really wants to say that, but I think if you are going to have that sort of mantra of, okay, this is how the world is, there are macro events that are happening that make it very difficult for us To have some price discipline, you have to be very selective, and you have to pick the right companies and be very thoughtful in your conviction.

AI assessment note: “It's hard to have a lot of price sensitivity at seed or series A”

Q your New York Times, your Wall Street Journals continue and prevail and be strong, and then you would see this incredible kind of long tail of creators on Substack, Who would kind of persist and write their own incredible content, but to very niche, verticalized audiences. Do you think it is this kind of tiny and then huge, and there's no no man's land? How do you think about that?

A I do think that we'll see the middle fallout first. I mean, we've already seen the middle fallout in terms of sort of small metro papers. And so, 100%, I do think we're going to see that trend. But what has been shocking this summer is to see the number of very famous writers who used to have their brand in their cachet from the New York Times or from the universities that they're working with. And when you look at this population, this population actually makes its money from being the chair of a journalism department and from being an op-ed writer. And those are the two institutions that I think have really fundamentally changed. One, because of COVID with the university education, and then two, the news media, just many readers and many people that used to have great trust in these institutions just no longer trusting them. So I do think you can see a shift even at the top, even at the Washington Post and the New York Times, where people will opt out of those premier institutions because they value the freedom to monetize their following. And they also value the freedom to say what they think.

AI assessment note: “I do think that we'll see the middle fallout first.”

Q What's the hardest element of your role with general catalyst today?

A Oh gosh, I think the hardest moment right now is just that we're quarantined in our houses. We've talked a lot about finding ground truth today, and it is really, really difficult to be a great investor when you're only listening to mononarratives and things happening online. I actually think you have to get out and speak to people and really know what's going on on the ground. I actually flew to my hometown in northern Florida A couple months ago and spent about six weeks there with my family and just really did it because I wanted to find out what's actually going on in the rest of the country. And I think that's so important for investors. So the thing that keeps me up at night is that we're going to be quarantined for a lot longer and not be able to get to this sort of ground truth because we are stuck in our homes.

AI assessment note: “I think the hardest moment right now is just that we're quarantined in our houses.”

Q off the government elements. When you think about like the verticalization of traditionally kind of horizontal players like government say, and you say, take this specific task and there's a company innovating in that realm. How do you think about like how big the market has to be for you to get excited? Do you know what I mean? How do you approach market sizing when you're unbundling bundled propositions?

A In the case of government, I mean, I think the markets are huge. I mean, you could talk about education, healthcare, defense and security. These are massive markets, and it's actually pretty easy to size these markets because the federal government is, or the budget is public. So you can see how much the government is spending, and you can see, okay, if we add technology to this, how large will the market actually be, and will people actually pay? The big question for me is not necessarily market size, because I think these are civic services that people will pay for. The big question is, Can you deliver a product that makes the experience much more delightful and that people will pay for it? And what is that entry point? So in the education, I mean, you look at something like Guild Education and Rachel's company. I mean, we've been talking about upskilling the American workforce for decades, since offshoring has become the way that we've built. And it took a company in Denver that's five years old to actually figure out how you align the incentives so that we can upskill the next generation of the American workforce, of the adult workforce. And so, to me, these markets are so large. It's just figuring out how to align the incentives and how to make sure that you're delivering a good service. Same thing with creating new defense companies like Andrel. For 30 years, the governme…

AI assessment note: “it's actually pretty easy to size these markets because the federal budget is public”

Q some ways kind of relates to a big question that I have, which is especially kind of when you look at a lot of your companies around regulation and defensibility, mine being like, how do you think about defensibility through regulation? I know Brian at Founders Fund talks about kind of complex coordination, especially around regulation, being the secret to defensibility. How do you think about kind of the relationship

A Yeah, I mean, the reason I love regulation, to be frank, is that I think it's a proxy for market size, but I think you have to look at the right regulated markets. So oftentimes you see Silicon Valley investors putting a lot of money into a company where they're expecting a regulatory change to happen, and that goes to your question about market timing. That can be terrifying. You can totally misread Washington, but I actually like these markets like aerospace and defense where the board is set, the regulation is set, and there is a massive, massive market On the opposite end of that regulation that's been in place for 50 years. And if you can get through the regulatory hurdles or the procurement hurdles and see that market on the other side, you are competing against the slowest moving incumbents because they have had an effective monopoly for decades. That's true of education. That's true of defense. It's true of credit reporting. And so I love companies that are really, really focused on these stodgy industries where, yes, there's a lot of regulation in the front end, but no one has really tried to get through it recently. And if you can get through that front end regulation, There's a massive market waiting for you at the back end of it.

AI assessment note: “if you can get through the regulatory hurdles or the procurement hurdles”

Q You mentioned the power of listening there and kind of it originating from the roots in journalism, obviously Mike Moritz roots in journalism also, and I spoke to Jeff Lewis, a mutual friend of both of ours, an incredible ambassador, huge, huge admirer of Jeff's, but if he asked specifically for you, how would you define your views and strategy vis-a-vis Mike Moritz?

A That is, like, the most Jeff question, uh, because I probably know more about Jeff's strategy than I do about Mike Moritz, but, uh, actually, I had a conversation with Mike Moritz maybe a year before I became a venture capitalist, and I asked him whether he thought that journalists could still become great investors given the kind of change in technology, and he was very honest. He said no. He said it's too competitive, it's too technical a field, and that too much had changed, and of course, I told him that I fundamentally disagreed, and he said something that really stuck with me. He said, no one took me seriously for the first seven years of my career because I was different. And if you go into venture capital, you have to be ready for the fact that very few people will take you seriously. And to me, that was some of the most liberating advice that I had received, because this field is so mimetic, and so many young people start out their careers wanting to impress other investors, and they're desperate to get into the hot deals because other people say they're hot. And when you let all of that go, and you invest on your own conviction, you get to invest in things that other people overlook. And I'd say, like, in It's a perfect example of that. There were very few traditional firms that were looking at defense or looking at a company with that big of a vision, and so I actual…

AI assessment note: “if you can kind of let go of what are other investors doing”

Q a lot in venture, and a lot boils down to the investment decision making process. Founders Fund is quite famous for having quite a loose investment decision making process, not with the kind of traditional partner meetings every Monday. In terms of conviction and investment decision making, how do you think about the two, and avoiding consensus thinking with the unanimous investment decision making? How do you think about that?

A It is probably the hardest Because once you have to constantly be optimistic and be thinking about, okay, do I actually believe what I'm hearing is true? But you also have to be kind of practicing skepticism and questioning your own assumptions. And I think that's what's really interesting about investing is that you are doing this sort of as a solo practitioner. You have to have sort of this internal dialogue of, is what I'm hearing true in the same way that a journalist would sort of say, okay, are these facts correct? Is it checking out? But you have to also be able to sort of dream the big picture and really, do you believe? And that's more of a faith Question. And that's where I think the partnership model really helps because the people that you spend the most time with in venture are really going to press you on. Do you actually believe what you say you believe? Are you falling into biases or traps about what you tend to prefer to see in a founder or company? So I think it's definitely an art, but in terms of building conviction, for me at least, it's a very personal thing, and it's very much this balance of faith and reason, and then I love having my partners who can test me on whether I actually Believe what I'm saying.

AI assessment note: “in terms of building conviction, for me at least, it's a very personal thing”

Q But my question to you is like, how do you advise founders when it comes to taking multi-stage money at Seed?

A I love that you brought up Andrew because Andrew was a very special case and that this team is So excellent. I mean, it really is, you know, I think everyone's watching The Last Dads, but it really is the 98 Chicago Bulls. I mean, this is such an extraordinary team that had worked together before, everyone operating at a level of excellence that you really just never see. The real need for a company that's going after such a big space, that really is a company that's going to follow in line with the Palantirs and SpaceX's of the world, is capital. And so even at Seed, I'm not sure how beneficial a Seed fund would have been to Andurl in terms of really being able to help them sort of achieve this mission. But the second point, even on Andrew, for seed founders that I'm constantly stressing is that you really need to find someone who's mission aligned. I think one of the things that founders do is they sometimes optimize for brand, or they're optimizing for round dynamics in a way that can be harmful if you find someone who's at a certain firm that is really mission aligned with you. And I think the biggest thing that I'm predicting will happen in the next 10 years to founders is that if you plan on being a successful founder, you are going to have a target on your back. It doesn't matter whether you are building a defense company or whether you are building a DTC shoe company. Y…

AI assessment note: “for seed founders that I'm constantly stressing is that you really need to find someone”

Q capital to double down and to reinvest. I'm really interested. How do you think about the reinvestment process when thinking about reserves and whether to do the next check and Bluntly, whether to lead the next round, whether to do pro rata, whether to do the minimum that you can kind of get away with without being mixed at dubiously. How do you think about that reinvestment decision making process?

A Yeah, no, so it depends on the company. So I'll say like, I mean, this is a great example, but with Anderil, we invested in the seed. We also invested in the A, but we didn't lead around until the series B when we co-led with Founders Fund. And so I think the benefit there of being flexible as a multi-stage firm is knowing that you can build ownership over time and being flexible with the founders about what they are looking for. So I think that's a perfect example of when you have a multi-stage firm, and when you're looking at companies that are capital intensive, you can be more flexible as to their needs. I often say in the fields that I work in, it's a lot easier to invest in seed in series B than it is to invest in A, and there's a reason for that, and that's because a lot of the companies I work with are deep tech companies, or they're engineering driven, and there is little traction at the A, so the company will look very similar at a series A versus a seed when you're really betting on team and story, and so it's It's hard to make that Series A bet, but at Series B, usually a lot of these companies that are either selling to government or that are working in highly regulated spaces have a significant amount of revenue where you can actually make the investment based on company traction, and so I think the benefit of being a seed through Series B investor is that you can…

AI assessment note: “with Anderil, we invested in the seed. We also invested in the A, but we didn't lead around until the series B”

Q kind of the challenge of inserting yourself at the A. I think a question for you when I think about that is kind of on pricing. How do you think about pricing? I mean, I see some pretty crazy pricing, say more than ever, actually, I think today. How do you think about your own price sensitivity? And how do you determine when to stretch versus when to be disciplined?

A It's a great question. And I think if you look at interest rates and the four trillion dollar cash infusion we just had and where investors are parking their money, it's very clear to me that the private market would Prices are what they are, and we can't sort of long for the good old days anymore. I'm focused on early stage, so in this environment, I think you have to be very confident that you're picking the right companies. It's hard to have a lot of price sensitivity at seed or series A in this environment. That said, I'm always amazed at investors who mock other investors for paying up for companies, and I think there's far more shame in losing on price than winning on price, and no one really wants to say that, but I think if you are going to have that sort of mantra of, okay, this is how the world is, there are macro events that are happening that make it very difficult for us To have some price discipline, you have to be very selective, and you have to pick the right companies and be very thoughtful in your conviction.

AI assessment note: “hard to have a lot of price sensitivity at seed or series A”

Q But my question to you is like, how do you advise founders when it comes to taking multi-stage money at Seed?

A I love that you brought up Andrew because Andrew was a very special case and that this team is So excellent. I mean, it really is, you know, I think everyone's watching The Last Dads, but it really is the 98 Chicago Bulls. I mean, this is such an extraordinary team that had worked together before, everyone operating at a level of excellence that you really just never see. The real need for a company that's going after such a big space, that really is a company that's going to follow in line with the Palantirs and SpaceX's of the world, is capital. And so even at Seed, I'm not sure how beneficial a Seed fund would have been to Andurl in terms of really being able to help them sort of achieve this mission. But the second point, even on Andrew, for seed founders that I'm constantly stressing is that you really need to find someone who's mission aligned. I think one of the things that founders do is they sometimes optimize for brand, or they're optimizing for round dynamics in a way that can be harmful if you find someone who's at a certain firm that is really mission aligned with you. And I think the biggest thing that I'm predicting will happen in the next 10 years to founders is that if you plan on being a successful founder, you are going to have a target on your back. It doesn't matter whether you are building a defense company or whether you are building a DTC shoe company. Y…

AI assessment note: “find someone who's at a certain firm that is really mission aligned with you”